As Grilling Season Approaches, OSU's Dr. Peel Talks on Beef Demand

 

Oklahoma Farm Report

09 May 2022

 

Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Mark Johnson. Today, Dr. Peel talks about beef demand.

 

With Mother’s Day behind us, attention now shifts to Memorial Day and the kickoff of summer grilling season. The last year has been characterized by exceptionally strong beef demand that began about a year ago. It appears this demand was driven by post-pandemic pent-up demand combined with surging beef exports. Boxed beef prices have come down from this period of extremely strong demand and adjusted down from a counter-seasonal January peak to current levels, 11.2 percent lower compared to the last week of January. In the last three weeks, Choice boxed beef values have dropped below year ago levels, which were surging higher at this time in 2021 (see figure below). Beef demand is not likely to repeat last year’s levels, but current levels are still relatively high compared to recent years. Comparisons to last year will look weaker for boxed beef and many wholesale cut values but that is not really a valid comparison to judge beef demand in 2022.  

 

There are plenty of reasons to be concerned about beef demand going forward. Beef prices are near record levels and consumers will face tightening discretionary income as cash reserves and savings are depleted along with reduced purchasing power due to inflation. However, all proteins are higher priced and the ratio of retail beef price to retail broiler chicken and pork prices is actually lower now compared to six months ago. Still, we watch for indications that consumers are “trading down” the from the most expensive beef cuts to cheaper value cuts.

 

Across a range of wholesale beef cuts, there are mixed signals. There are growing indications in the past couple of weeks of some weakness in beef demand. Wholesale ribeye prices have decreased the past four weeks at a time when they are typically increasing seasonally. Conversely, beef tenderloin prices increased strongly ahead of Mother’s Day. Tenderloin prices declined the first week of May and typically drop a bit into the summer as steakhouse traffic slows when folks are outside and doing more grilling. Wholesale brisket prices have adjusted down the past three months from the exceptional levels of the previous year, holding generally steady heading into summer. The increasingly popular beef tri-tip has maintained strong prices so far this year and is increasing seasonally, though nowhere nearly as strong of an increase as this time last year.

 

A bellwether indicator of summer grilling demand is strip loin prices...

 

more, including chart

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